Saudi's gaming startups doubled in 2022 but funding remains a hurdle: Report

Saudi Arabia's gaming industry has witnessed a significant boost. According to a survey's findings reported by The National, the gaming startups in the region have almost doubled to 24 in 2022 from 13 in 2021. This is reportedly driven by incubation programmes.

Conducted between April and June, the survey comprised interviews of 51 game developers from a mix of solo developers, mid-sized teams, and large companies.

Around 80% of respondents who have established a game studio in Saudi Arabia have found the experience to be "relatively easy".

The report added that Saudi's gaming industry reflects a strong collaborative spirit. Almost 84% of the respondents have linked up with other local developers at some point, mainly after connecting online or networking with them at events and conferences.

However, the number of studios remains much lesser in comparison with Europe, which has 5,000, and the US, which has 3,084.

The report added that for almost 67% of respondents, financial risks and safety net-related risks were obstacles in setting up startups. Nearly 35% addressed a lack of appropriate knowledge of company functioning to be a major factor in preventing the establishment of new studios.

Additionally, the companies face hurdles like access to funding and talent (both local and international), as well as a high cost of living.

The report stated, “While local investors are backing up tech startups, they do not seem to have found the right entry point for gaming, mainly because there are few companies with proven track records or effective business plans."

When it comes to issues related to funding, a common problem cited was the lack of understanding of the sector or hesitance in investing in gaming companies. All the interviewees are self-funded, which further highlights the above-stated challenge.

The report added that around 65% of developers have never tried to seek investment. The most common reason cited was the lack of preparation in pitching their games.

Overall, according to Mordor Intelligence, the Middle East gaming market is expected to grow at a CAGR of 13.88% during 2022-2027.